Local Officials’ Support for PILOTs/SILOTs: Nonprofit Engagement, Economic Stress, and Politics

• Author: Lauren Dula,Kellie McGiverin‐Bohan,Rachel Miller,Kirsten Grønbjerg
• DOI: http://doi.org/10.1111/puar.12579
• Published date: 01 November 2016
• Date: 01 November 2016

Local Off‌i cials’ Support for PILOTs/SILOTs: Nonprof‌i t Engagement, Economic Stress, and Politics 951

Public Administration Review,

Vol. 76, Iss. 6, pp. 951–963. © 2016 by

The American Society for Public Administration.

DOI: 10.1111/puar.12579.

Lauren Dula is a PhD student and associate

instructor in public affairs in the School of

Public and Environmental Affairs at Indiana

University. She was a Dean ’ s Council Fellow in

Nonprofit Scholarship and recently published

research regarding pathways to volunteerism

among newly relocated older adults. Her current

research investigates the impact of gender

diversity of nonprofit boards on organizational

performance. She holds a master of public

administration degree from the University of

North Carolina Wilmington.

E-mail: ldula@indiana.edu

Kirsten Grønbjerg is professor and

associate dean for faculty affairs in the School

of Public and Environmental Affairs at Indiana

University and holds the Efroymson Chair

in Philanthropy in the Lilly Family School of

Philanthropy, Indianapolis. She directs a major

project on the Indiana nonprofit sector ( http://

www.indiana.edu/~nonprof ) that analyzes

and disseminates information about Indiana

nonprofits and their contributions to the state

and local community. Her other work focuses on

nonprofit funding relations, nonprofit capacity,

nonprofit data sources, and the American

welfare system.

E-mail: kgronbj@indiana.edu

Kellie McGiverin-Bohan is a doctoral

candidate in public affairs in the School of

Public and Environmental Affairs at Indiana

University, where she is currently writing her

dissertation on nonprofit financial management.

As a research assistant with the Indiana

Nonprofits Project, she has coauthored

several reports. She holds a master of public

administration degree in nonprofit management

and policy analysis and formerly worked as a

project manager with the Indiana University

Center for Survey Research.

E-mail: kmcgiver@indiana.edu

Abstract : Nonprofit property tax exemption has become a major policy issue as the collapse of the housing market, the

Great Recession, and property tax caps have threatened local tax collections. Consequently, many local governments

have sought to obtain payments in lieu of taxes (PILOTs) from charities that are formally exempt from property taxes.

Using a 2010 survey of local government officials in Indiana, this article examines whether support for PILOT policies

is related to officials’ personal involvement with nonprofits, their views on government–nonprofit relationships, the

type of position they hold, the level of economic distress in the county, local political conditions, and local nonprofit

wealth. The findings support most of these hypotheses but also show that attitudes toward PILOTs appear to be shaped

by somewhat different concerns than attitudes toward services in lieu of taxes (SILOTs).

Practitioner Points

• Widespread support for payments in lieu of taxes (PILOT) by Indiana local government officials (LGOs)

reflects tough economic times faced by many local governments but also the significant value of the

exemption for charities.

• Although economic considerations appear important in shaping LGO attitudes toward PILOTs, support also

depends on political factors.

• LGO attitudes toward PILOT policies appear sensitive to the type of charity—universities, hospitals, or

churches—that would be subject to PILOTs.

• Philanthropic and charitable leaders should pay careful attention to budgetary constraints faced by units of

local government and would be well advised to develop strong connections to local government officials so

that they can convey the important ways in which they work collaboratively with government.

• Charities should be ready to document the valuable services they provide to local communities, demonstrate

how PILOTs would burden their ability to provide such services, and explain how the exemption from

property (and other) taxes is an important way in which governments help nonprofits provide such services.

Kellie McGiverin-Bohan

Kirsten Grønbjerg

Indiana University, Bloomington

with

Lauren Dula

Indiana University, Bloomington

Rachel Miller

Mathematica Policy Research

Local Officials’ Support for PILOTs / SILOTs :

Nonprofit Engagement, Economic Stress, and Politics

N onprofit property tax exemption has become

a major policy issue nationwide, as revealed

in hundreds of news media accounts and

lively action in state capitals.

1 These developments

reflect growing budgetary pressures on local

government, which only intensified with the collapse

of the housing market in 2006.

2 Mass foreclosures

reduced home property values and threatened

property tax collections, which made up about 25

percent of revenues available to local governments at

the national level and 32 percent in Indiana in 2007

(Grønbjerg 2011 ). The Great Recession (December

2007 through June 2009) further threatened revenues

for many local governments by curtailing receipts

from income and sales taxes (Pagano and McFarland

2013 ). The American Recovery and Reinvestment

Act of 2009 softened the blow and gave state and

local governments some breathing room by allocating

$140 billion in fiscal relief (Carley, Nicholson-Crotty,

and Fisher 2015 ). However, in Indiana, a 2010

constitutional amendment to cap property tax rates

threatened to aggravate the impact of the recession.

Similar caps exist in Massachusetts, New York,

California, and Michigan.

Consequently, local government officials (LGOs)

in Indiana and elsewhere have had to operate with

increasingly limited property tax receipts and make

tough decisions about cuts to needed services or

programs. To reduce the impact of such choices, local

officials have looked for other solutions, including

seeking payments or services in lieu of taxes (PILOTs/

SILOTs) from charities that are exempt from paying

income, sales, and most notably, property taxes (Strom

2010 ). The specific types of services involved in

SILOTs are rarely specified, but charities have offered

free use of facilities or scholarships for local residents

as part of such agreements (Work and Burnett 2012 ).

Rachel Miller is a research analyst at

Mathematica Policy Research in Oakland,

California, where she conducts public policy

research and evaluation in the health policy

field. She received her master of public

administration degree in nonprofit management

and policy analysis from the Indiana University

School of Public and Environmental Affairs in

2015. She served as a research assistant on the

Indiana Nonprofits Sector Project from 2013 to

2015, during which time she coauthored several

reports and conference papers.

E-mail: rachelmiller1983@gmail.com